Help Centre

The bill shock bungle

The telcos and ACMA may be cheering the new consumer protection code but the reality is that both have neglected the needs of users for far too long.

The telco industry, along with the Australian Communications and Media Authority (ACMA) were quick to sing their own praises last week with the release of the 2012 telecommunications consumer protection code (TCP).

One major highlight of this code is the new, industry-funded body called Communications Compliance and amongst all the back-slapping and high fiving, the PR machine swung into action to tell us how lucky we are the bill shock was now going to be a thing of the past.

Both sides of the code got in on the act with the telcos and the regulator telling us that the code will make a material difference and “heralds a sea-change in the telco consumer experience in Australia”.

After years of putting up with the “confusopoly” of misleading pricing and marketing terms consumers have every right to feel relieved, but this fix could have been delivered a long time ago.

Contrition and redemption

The telcos have now promised to clean up their act but what they really need to do is offer their customers a full apology. It could read something like this:

“We humbly and sincerely apologise to each and every Australian, business and households alike. We have been neglectful of providing you with any customer experience that could have made your life easier. Instead of helping you we deliberately set out to mislead and confuse you so we could make some extra dollars.

We are sorry that we gouged you with trickery to the tune of $1.5 billion per year.

Please accept our apology, we have now sought to make some helpful changes that will reduce the pain to about $600 million per year”.

And the regulator bears some responsibility here as well. Ineffectual enforcement allowed the telcos to get away with their trickery for far too long.

It failed to act on the fact that a telco-pricing cap was never actually a pricing cap and despite having the necessary information it let the industry get away with a pricing model that hurt consumers.

More teeth or more loopholes?

You will have to excuse me if I seem a tad underwhelmed by the cheer squad but the new code is quite simply an industry regulating itself before it had the kitchen sink thrown at it.

Unsurprisingly, whenever this happens, the self-regulatory code is more self-congratulatory than regulatory and it becomes a question of how much can we get away with and how far can we push the boundaries before the regulators are left with no choice.

For the regulator, self-regulation is probably the best path forward because let’s face it, regulations by industry professionals who know their subject matter is often much more meaningful than an arbitrary set of imposts by an external body which does not have the granular understanding.

Still, one has to wonder if the regulator really has done enough? Has the regulator given itself more teeth, or the telcos more loopholes?

Lets look at some of the heralded changes and assess them on their merits:

New code agreed after two years of wrangling – Two years and the regulator didn’t step up to the plate in the interim and the carriers didn’t make any changes voluntarily in the interim. Let’s not forget that this attitude was in place before the code discussions began. While it has taken four years for these improvements to come, Australia has seen a staggering $6 billion in excess charges, that have gone straight to the pockets of the telcos.

According to ACMA, the changes are “designed to stop bill shock”- After taking years to implement a change the best we can hope for is “designed to stop”. I would have though the words “will stop bill shock” were more appropriate. In banking, when there is fraud, the risk lies with the bank. In telecommunications, shouldn’t the risk lie with the telco? In effect, the telco is providing a level of credit. The fact that products were often called caps and customers were still stung with bill shock is deplorable.

Real time bill warning and usage information – Great move, but why did the telcos sit on their hands for over five years and not get on the front foot. Most carriers already offered this service, but it has not been well publicised and has been hidden away in hard to use (and find) online tool kits and account management tools that render the service impractical to say the least. In fact, the telcos are still hiding behind a 48 hour window where bill shock will still exist. Now, I understand the complexities of billing data and interconnect agreements, but again, the tools are there to prevent bill shock (such as Mobile Device Management tools) but where is the gumption to put these front and centre or to take on the risk until the window is reduced?

Caps are now gone – Can someone provide a coherent explanation on how the concept of a cap, which is not actually a cap, was continually peddled by the telco industry and allowed to be used by the ACCC. The good news is that this completely misleading construct will be consigned to the annals of history. The bad news is that it will resurface in products with “inclusions” and hidden “exclusions”. Often these are dressed up as “fair play” or “fair use” policies – both of which are anything but fair.

Do I think the new code is a positive step forward, yes. Do I think more could have been done and should be done, absolutely!

One of the press releases I read said that telcos want to provide a more positive experience and own the customer? Oh, so they only now realised that the customer was important and should be treated as such. I would have liked to have been present when the penny dropped.

Tony Simmons is the managing director and founder of The Full Circle Group, an independent telecommunications consultancy firm focused on Telco expense costs and management.

Tony Simmons

Latest News

Related Articles

IMPORTANT: This information has been prepared without taking into account your objectives, financial situation or needs and you should consider if the information is appropriate for you before making an investment decision. Unless otherwise specifically stated or disclosed (such as the InvestSMART Diversified Portfolios Product Disclosure Statement), neither InvestSMART Financial Services Pty Ltd nor any of its Related Companies make any recommendations as to the merits of any investment opportunity referred to in its emails or its related websites. Product disclosure statements for financial products offered through InvestSMART can be downloaded from this website or obtained by contacting 1300 880 160. You should consider the product disclosure statement before making a decision about the product. All indications of performance returns are historical and can not be relied upon as an indicator for future performance.